This week’s TGIF considers a recent case where a liquidator obtained judicial advice to commence proceedings against a director and related company concerning the unlawful receipt and use of trust money.
Key takeaways
As the chill of recession bites for homes and businesses alike, SMEs are faced with the daunting prospect of navigating their way through the bleak mid-winter. In October 2022, inflation reached 11.1% and company insolvencies were 38% higher than the same period last year. Creditors’ voluntary liquidations in the same period were 53% higher than in 2019 (i.e. pre-pandemic), continuing the theme of businesses being forced to consider this terminal insolvency process, as following the pandemic they have struggled to adapt to the challenging market conditions.
In East-West Logistics LLP v Melars Group Ltd [2022] EWCA Civ 1419 the Court of Appeal once again considered the test for establishing the location of a debtor's centre of main interests (COMI) for the purposes of the Recast Regulation on Insolvency Proceedings 2015/848. The case was a second appeal considering whether to uphold the dismissal of a winding up order on the grounds that the debtor's COMI was not in the United Kingdom.
Section 303(i) of the Bankruptcy Code authorizes the court to award the debtor sanctions on account of an improper filing of an involuntary petition against it. But can a non-debtor third-party obtain such a relief? Yes, says the Bankruptcy Court In In re Vascular Access Centers, L.P., No. 19-17117 (AMC), 2022 WL 17366463 (Bankr. E.D. Pa. Dec. 1, 2022).
Background
Walkers acted as Cayman Islands counsel to Oriente Group Limited (the "Company”) in respect of its successful petition for the appointment of Mr Kenneth Fung of FTI Consulting (Hong Kong) Limited, Mr Andrew Morrison and Mr David Griffin of FTI Consulting (Cayman) Ltd as joint restructuring officers (the "Joint Restructuring Officers") pursuant to Section 91B of the Cayman Islands Companies Act (as amended), being the first petition under the new restructuring officer regime, which came into force on 31 August 2022.
These are unprecedented times for businesses trying to manage the challenging impact of inflation, labour shortages, supply interruptions, elections, fires, floods, wars and a pandemic. It is more important than ever to manage working capital, mitigate risk and monetise assets.
The Probuild and Virgin Australia administrations confirm that virtual meetings in external administrations are now an integral part of insolvency in a post-pandemic world. Although recent changes to the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) provide greater flexibility, there are aspects that insolvency practitioners need to consider and Court directions may be necessary.
The liquidators of Intellicomms applied to the Court for relief in relation to a sale agreement entered into between Intellicomms and a related company for the sale of business assets, claiming it was a creditor-defeating disposition and a voidable transaction.
The Autumn budget will have done little to ease the concerns of companies facing significant trading pressures as the country tries to get back on its feet following the pandemic, the ongoing effects of Brexit, the Ukraine conflict and the current cost of living crisis. Inflation has now topped its forecasted peak at 11.1%; there are soaring energy prices and the UK is now officially in recession.
In a decision handed down by Brown J on 20 May 2022 in Michaela Manicaros v Commercial Images (Aust) Pty Ltd [2022] QSC 83, the Queensland Supreme Court provided useful guidance on when a liquidator may recover their legal costs of a remuneration application from a creditor objecting to the application (Objector).